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The shortcomings and hidden costs of ride-sharing services

Most Bay Area residents are well aware of the controversy surrounding Uber and other ride-sharing services. While these services promise reliable transportation at prices well below those of taxi companies, they seem to be less than reliable when it comes to legal issues regarding insurance coverage.

On New Year's Eve in 2013, an Uber driver in San Francisco struck and killed a 6-year-old pedestrian as she crossed the street in a crosswalk. This devastating accident and others since then have raised public awareness of two important issues regarding insurance coverage and distracted driving.

Most personal insurance policies prohibit drivers from using their vehicles for commercial transportation purposes. Those who accept fares usually need a more comprehensive insurance policy. Uber and other companies have said in the past that their insurance can supplement any additional liability costs.

But when that fatal pedestrian accident occurred, Uber was quick to distance itself from any responsibility or liability. The company claimed that the driver was not working for Uber when the accident occurred. The driver was waiting for a fare but did not have a passenger in the vehicle at that exact moment.

The other complaint against services like Uber and Lyft are that their smartphone apps – which are needed to do the job – greatly increase the risk of distracted driving accidents. With Uber, drivers are offered a potential fare via an alert on their smartphone. They then have just 15 seconds to decide whether or not to accept it.

While a driver could tap the screen and accept the fare without looking, that doesn't seem realistic. They need to know where the fare is in order to make a decision. In light of this, ride-sharing services seemingly violate California's stringent laws against cellphone-related distracted driving.

Uber, Lyft and other ride-sharing services may seem like a much cheaper alternative to established and entrenched taxi companies. But if those savings mean increased distracted driving and inadequate insurance coverage, perhaps ride-sharing services are not so affordable after all.

Source: The New York Times, "Distracted Driving and the Risks of Ride-Hailing Services Like Uber," Matt Richtel, Dec. 21, 2014

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